Qualcomm patent case dismissed

Wireless giant Qualcomm said yesterday that it scored a victory against rival Broadcom after a federal judge threw out a patent case that sought to upend Qualcomm's licensing business model.

U.S. District Judge William Hayes of San Diego granted Qualcomm's request to dismiss the lawsuit brought by Broadcom in October 2008. It was a potentially damaging case because it seemed to strike at the heart of the way Qualcomm licenses its technology.

Hayes dismissed the case in part because Broadcom did not identify any specific patents in its lawsuit – instead attacking Qualcomm's licensing scheme as overreaching.

For the court to rule in Broadcom's favor, it would need to examine specific patents – Qualcomm has about 6,000 – to determine that they did what Broadcom claimed, Hayes said in a ruling.

Hayes also ruled that Broadcom's claims of damages were too speculative to support what its was asking the court to do.

Broadcom is not giving up. “We intend to address the court's comments and refile within the next two weeks,” said Bob Marsocci, vice president of corporate communications.

The case is complicated. But what Broadcom essentially claimed was that Qualcomm, the world's biggest maker of mobile-phone chips, was asserting its patent rights too broadly.

As a result, Broadcom claimed Qualcomm was stifling competition in the wireless industry because a “cloud of potential patent infringement claims” hurts Broadcom's sales to mobile phone makers.

Broadcom's lawsuit centered on when patents become exhausted – that is, no longer enforceable because they're already asserted elsewhere in the process.

Qualcomm sells chip clusters used in wireless devices directly to phone makers. But it also licenses its technology to phone makers themselves and collects a royalty on the sale of phones.

And it licenses its technology to other chip makers, who in turn make and sell chips to phone makers.

Broadcom argued that patents become exhausted after one step of this process – either when licensed to phone makers or licensed to other chip makers – but not both.

So, Broadcom claimed, Qualcomm could not charge a license fee to a phone maker and also charge a license fee to Broadcom for using Qualcomm technology in a chip cluster sold to that phone maker.

Both companies have been involved in a string of legal disputes in the United States and internationally over patents and anti-competitive issues, with some cases resolved and others pending or in appeal.

In July, Qualcomm settled another important legal dispute when it reached a royalties deal and long-term licensing agreement with phone maker Nokia.